Retail Sales Experience Huge Drop Off From March To April

(FamilyRetirementClub.com)- The coronavirus pandemic and near-complete shutdown of the country has done quite the number on the economy. The shutdown has been especially disastrous to retailers, most of which were forced to shutter their doors completely as part of states’ stay-at-home orders.
On Thursday, we learned just how bad it was for retailers in April. The Census Bureau released stats that showed retail sales experienced their largest monthly drop since the department started recording the stat back in 1992.
Retail sales dropped a whopping 16.4% from March to April. Combined with the 8.3% drop from February to March, it’s been an extremely tough few months for retail companies across the country.
Layoffs and furloughs across the country have significantly impacted discretionary spending, as people are focusing their spending on essentials and food rather than items such as clothing and other retail items.
Excluding automobiles, the drop in retail sales was an astounding 17.2% in April. The accessories and clothing category of retail sales was the hardest-hit segment, experiencing a monumental 78.8% drop month-over-month. The numbers represented an 89.3% drop year-over-year for April.
As the managing director of GlobalData Retail, Neil Saunders, said:
“The shutdown of most physical apparel stores, plus the sharp decline in outfits needed for work and leisure, contributed to the precipitous drop.”
As states begin to re-open and relax some of the coronavirus-related restrictions on business and movement, Saunders said May should show some improvements. That being said, he believes it’s going to be a tough year overall for the retail industry.
“Retail’s recovery will be slow and, in our view, it won’t be until 2021 before trade starts to return to more normal patterns,” Saunders said.
Some large nationwide retailers have already been so dramatically affected by the shutdown that they’ve had to resort to other measures. J.Crew, for instance, filed for bankruptcy protection but plans to emerge as a profitable company still. Neiman Marcus will do the same, and JCPenny is expected to file in the near future.
Even the nation’s oldest department store, Lord & Taylor, plans to liquidate all its stores as soon as they’re allowed to open and then eventually shutter them for good.
At the same time, some segments of the retail sector are doing well. Online sales increased 8.4% from March to April as more people were forced to do their shopping for essentials online. Companies such as Amazon, Walmart, Target and Kroger are benefitting from this new wave of online shopping.
Grocery stores are doing well, too. Not only are people stocking up on household supplies, but they are preparing more of their food at home instead of ordering takeout or eating in restaurants or bars.
That trend is likely to continue, but that represents only a small portion of the overall retail industry. And the bad news for retailers is that there isn’t much good news in sight.
Even as the country begins to re-open, employment numbers are grim, and consumers just don’t plan on spending like they used to in the recent past.